State officials see $2.1 billion deficit

November 22, 2008|By Aaron Deslatte Tallahassee Bureau

TALLAHASSEE — State economists agreed Friday that Florida's state agencies, courts and classrooms will fall about $2.1 billion into the red this year. The reason: plummeting revenues caused by the global recession, the credit crunch and the collapse of investment and retirement accounts in recent months.

The revised revenue projections will force Gov. Charlie Crist and the Legislature to apply some combination of reserves and spending cuts to balance the budget for the year ending June 30. And in the next budget year, the economists said, lawmakers could be looking at a deficit of as much as $5.8 billion.

"The worst is ahead of us," said Amy Baker, the Legislature's chief economist.

The decline in revenue is led by the sales tax, which provides 75 cents of every $1 of state tax revenue. Economists' projections for what the 6-cent-per-dollar levy will generate this year have dropped $692.3 million since the last estimate three months ago.

As businesses have seen their incomes shrink, corporate taxes have also been hammered, revised downward $212 million since August.

And the state housing market has nearly shut down.

Two years ago, Florida collected $625 million in documentary stamp taxes on real estate transactions. Now, economists predict the state will collect $172 million through the June 30 end of the fiscal year - $80.5 million less than they thought three months ago.

Florida's constitution prohibits deficit spending, which means an already pared-down $66 billion budget is certain to shrink further this year.

In August, after economists projected a $1.4 billion shortfall, Crist and Republican legislators used nearly $700 million from the state's "rainy day" fund to bridge roughly half of that gap.

On Friday, the economists added another $1.4 billion to the expected shortfall, leaving lawmakers to come up with a total of $2.1 billion.

Once this year's budget problems are dealt with, lawmakers will be looking at a revenue shortfall for the 2009-10 fiscal year of roughly $2.3 billion - not including expected spending growth in programs such as Medicaid, food stamps and public schools. That could swell the potential deficit to $5.8 billion.

Aaron Deslatte can be reached at 850-222-5564 or at adeslatte@orlandosentinel.com.